To find more specific info on what you need to put away based on your income, check out this tax calculator. For example, say you take out $4000 per month ($48k/year) in drawings and have no other personal income, you’d need to put away around 15% for tax. That way, when the taxman comes a-calling, you’ll have a neat little pocket of dosh all ready to cover your tax bill. Nothing says efficient and effective like having to sort your own tax.ĭepending on your income (or tax bracket), it’s a good idea to put aside a certain portion of your income for tax, and do it consistently. No tax is deducted from drawings, so it’s recommended you set aside a little extra cash to cover any personal income tax. The only downside is that you will be personally responsible for tax, aka, you better be on top of your money management game. If you own your own business, this cash goes straight into your pocket. Drawings are simply money you have taken (with drawn) from the company bank account for your own personal use. What are drawings? Well, before you get ahead of yourself, drawings are not your salary or your profit. Taking drawings from the BusinessĪlright, let’s start with the basics. That’s why we’ve gone ahead and pulled together a quick guide to finding the right option to pay yourself as a small business owner. (Cue tacky segue) And it’s a lot we can help with. How much do shareholders get paid? Can shareholders take a salary from the business? What’s a director’s salary? It’s a lot, we know. If we say it’s confusing, it’s confusing. There’s a lot to consider, and it can be confusing trying to navigate the wild world of drawings vs salary in NZ - and trust us, we’re accountants.
Whether you’d prefer to take drawings from your business or jump straight to a salary, it’s important to get a better understanding of what all that actually means, too. Every business is different, and different variables mean there’s no one size fits all or best pick here. Drawings, salary, shareholders salary, dividends - the list goes on. Well, in the words of Pitbull, you got you got options. What are the options for paying yourself as a small business owner?
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